Tolano Anderson, et al v. Wachovia Mtg Corp, et al

Filing 920100913

Opinion

PRECEDENTIAL U N IT E D STATES COURT OF APPEALS F O R THE THIRD CIRCUIT

Nos. 09-2275 and 09-2336 _____________ T O L A N O ANDERSON; CATHY ANDERSON; RICHARD WILKINS; BRENDA WILKINS; LLOYD WHEATLEY; AUDRIA WHEATLEY, Appellants No. 09-2275 v. W A C H O V IA MORTGAGE CORPORATION; WACHOVIA CORPORATION, A p p e lla n ts No. 09-2336

Appeals from the United States District Court fo r the District of Delaware (D .C . Civil No. 06-cv-00567) D is tric t Judge: Honorable Sue L. Robinson

Argued January 25, 2010

B e f o r e : RENDELL and JORDAN, Circuit Judges, a n d PADOVA, District Judge*. (F ile d : September 13, 2010)

John S. Grady, Esq. [ARGUED] G ra d y & Hampton 6 North Bradford Street D o v e r, Delaware 19904 Counsel for Appellants Cross Appellees M ic h a el J. Barrie, Esq. B e n e sc h 2 2 2 Delaware Avenue S u ite 801 W ilm in g to n , DE 19801 S te p h e n A. Fogdall, Esq. [ARGUED] S c h n a d e r Harrison Segal & Lewis LLP 1 6 0 0 Market Street S u ite 3600 P h ila d e lp h ia , PA 19103 Counsel for Appellees Cross Appellants __________________ * H o n o ra b l e John R. Padova, Senior Judge of the United S ta te s District Court for the Eastern District of P e n n s ylv a n ia , sitting by designation. 2

OPINION OF THE COURT

RENDELL, Circuit Judge. T h is case is brought by three African-American couples w h o , in 2004, purchased adjacent houses in a Dover, Delaware, c o m m u n i ty known as "Silver Lake." Plaintiffs received m o rtg a g e s from Wachovia Mortgage Corporation, but only after W a c h o v i a imposed several conditions on the approvals of these m o rtg a g e s. Plaintiffs allege that these conditions were racially m o tiv a te d , and brought suit against Wachovia under 42 U.S.C. § 1981 and various state law causes of action. T h i s appeal requires us to identify, as a matter of first im p re ss io n , the elements of a prima facie case of lending d is c rim in a tio n under § 1981. Whether plaintiffs have made out a prima facie case of discrimination is a close call, but even if th e y have, they have not undermined Wachovia's legitimate re a so n s for imposing the conditions it did. Thus, we conclude th at they have not shown that the mortgage conditions were im p o sed for discriminatory reasons. The District Court th e re f o re properly granted summary judgment to Wachovia on th e § 1981 claim. We also conclude that the District Court c o rre c tly granted summary judgment on plaintiffs' breach of c o n tra c t and tortious interference claims, and that it acted within its discretion in denying plaintiffs' motion to compel certain d isc o v e ry. Finally, we find that the District Court acted within 3

its discretion in remanding plaintiffs' good faith and fair dealing c la im to Delaware state court. We will therefore affirm the D istric t Court's orders and judgment. I. A. P l a in tif f s Tolano and Cathy Anderson, Richard and B re n d a Wilkins, and Lloyd and Audria Wheatley purchased a d ja c en t houses in the Silver Lake community from an in d iv id u a l named Peter Aigner. On June 18, 2004, plaintiffs a g re e d to go to settlement on August 6, and agreed that if the h o u se s were not purchased by that date they would forfeit their jo in t deposit of $40,000 on the total purchase price for all three h o m e s of $800,000. After reaching this agreement, plaintiffs c o n ta c te d Wachovia to arrange financing. Several individuals at Wachovia were involved with p la in tif f s' loans. J.D. Hogsten was assigned as plaintiffs' loan o f f ic e r, and appears to have had the most contact with them. C o lle e n Fazzino acted as the underwriter for the Anderson and W h e a tle y loans, George Akerley acted as the underwriter for the W ilk in s loan, and Terri Hamm acted as an "exception officer" to address issues specific to the Wheatley loan. E a c h of the couples' loans was subject to a unique set of c o n d itio n s. With respect to the Anderson loan, plaintiffs claim th a t Wachovia mandated extensive, pre-sale repairs to the h o u s e 's drywall, insulation, and plumbing, after an independent a p p ra is e r informed Hogsten that the property could not be 4

a p p ra is e d without such repairs. The Andersons contend that th e se repairs were especially challenging both because of the a c c e ler a te d timetable and because they needed to obtain p e rm is s io n from Aigner to make repairs before purchasing the h o u se . Nonetheless, the repairs were completed, and the sale c lo s e d on schedule. W a c h o v ia imposed several conditions on the Wheatley lo a n . It initially denied his application for a non-incomev e rif ic a tio n loan, which would have required a 15% down p a ym e n t, because Mr. Wheatley's credit score was too low for th a t type of loan.1 The Wheatleys then changed their application to a "stated income loan," JA488, for which the credit score was s u f f ic i e n t, and which would have required a 10% down p aym e n t. 2 Wachovia, however, then found the property's co n d itio n to be inadequate and required repairs to the house's ro o f, heating system, pipes, and floors. After those repairs were

Non-income-verification loan applicants are not re q u ire d to provide certain financial information, such as their in c o m e , as part of the application process. JA488, JA500. Nonin c o m e - v e rif ic a tio n loans with a loan-to-value ratio over 75% w e re only available to applicants with a credit score at a level th a t the Wheatleys' credit score did not reach. JA681. In some instances, a "stated income" loan can be a c q u ire d with a lesser down payment than a non-incomev e rif ic a tio n loan, but applicants are required to provide financial in f o rm a tio n and show that they have sufficient assets and annual in c o m e for their desired loan. JA308, JA488, JA501-02. 5
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c o m p l e te d and an appraiser submitted a completion certificate, W a c h o v ia required the Wheatleys to submit an additional c o m p l e tio n certificate from a roofing specialist showing that the n e c es s a ry repairs to the roof had been completed. The W h e a tle ys were not told of this new requirement until the day of c lo s in g , preventing the closing from occurring on schedule. (A ig n e r granted an extension of the sale deadline, however, and th e Wheatley sale closed on August 13.) In addition, after c o n d itio n a lly approving the Wheatleys for the loan requiring o n ly a 10% down payment, Wachovia reclassified the loan as an " e x c e p tio n loan" and required them to provide a 20% down p a ym e n t. When the Wheatleys attempted to use funds from th e ir small business toward the down payment, Wachovia re q u ir e d them to have an accountant verify details of the b u s in e s s 's tax filings. F in a lly, Wachovia challenged the Wilkinses' use of a c o n v e n ie n c e check issued by their credit card company to pay th e ir earnest money deposit to Aigner. However, once the u n d e rw rite r learned that Mr. Wilkins had obtained a secured lo a n and used its proceeds to pay the balance due on his credit c a rd , he determined that this issue had been resolved. B. P lain tiff s attempt to support their claims that Wachovia im p o s e d discriminatory conditions on their loans with the f o llo w in g three types of evidence. F irs t, plaintiffs provide anecdotal evidence of the racial m a k e u p of the Silver Lake community to support their 6

c o n ten tio n that Wachovia imposed the mortgage conditions to p re v e n t them, as African-Americans, from moving into a p re d o m i n a n tly Caucasian neighborhood. They testified that the S ilv e r Lake community is "almost exclusively . . . white," and th a t they believed that the community "desired that it remain that w a y." JA369. They also presented an affidavit from a Dover in s u ra n c e agent stating that it was common knowledge that the h o m e s in Silver Lake "were almost all owned by white f a m ilie s ." JA191. Mr. Anderson testified that Deanne Wicks, a Wachovia employee who was not involved in these tran sac tio n s, told him that "`[t]here are a lot of people that are n o t happy with you all purchasing homes on Silver Lake,'" and th a t "`Silver Lake is an exclusive lily white community and now h e re you guys come.'" JA384-85. S e c o n d , plaintiffs offer comparative evidence based on th e ir experiences. They claim that the banks in their prior real e s t a te transactions, which involved purchases of property in m in o rity neighborhoods, did not impose such stringent c o n d itio n s . Mr. Anderson testified that Wachovia itself had not im p o s e d similar requirements when it financed his prior p u rc h a se s of several investment properties and an unimproved l o t. Mr. Wheatley testified that he had not experienced d ifficu lties in real estate transactions involving other banks. Mr. W ilk in s testified that he had never been questioned about the so u rc e of his earnest money deposits in prior real estate tra n sa c tio n s , although he conceded that he had never used a c re d it card convenience check for such a purpose before. T h ird , plaintiffs testified to a number of comments made b y Hogsten that they believe demonstrated discriminatory 7

a n im u s . According to Mr. Anderson, Hogsten said to him, " `yo u people don't understand how the process works,'" which A n d erso n believed indicated racial prejudice. JA387. Mr. W h e a tle y also testified that Hogsten said to him that "you p e o p le don't understand the loan process"; Wheatley " in f e r[ re d ]" that this was a reference to "the Afrocentric race." JA 4 4 8 . Mr. Anderson further testified that Hogsten said, "`I'm g e ttin g a lot of pressure on this transaction'" and "`a lot of h e a t.'" JA398. Although Hogsten did not identify who was p re ss u rin g him, Anderson construed his comments to mean that " p e o p le did not want this deal to go through and he was being p r e s s u r e d to cause it to collapse." JA398. Mr. Wheatley also te stif ie d that Hogsten said "that I'm getting a lot of pressure and th e r e are people who do not want you all to buy these p ro p e rtie s." JA442. According to Mr. Wilkins, Hogsten had "a n a sty attitude" and was "unprofessional." JA520-21.3 C. T h is case was initially filed in Delaware state court, and w a s removed by Wachovia to federal court. Plaintiffs then a m e n d e d their complaint, asserting that Wachovia had violated 4 2 U.S.C. § 1981, had breached a contract with plaintiffs, had b re a ch e d the covenant of good faith and fair dealing, and had

As noted later in connection with our discussion of p re te x t, Hogsten explains that his statements about "pressure" in the loan process were based on the expedited time frame, the c o m b i n e d nature of the three sales, and constant calls from p l a in t if f s . 8

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to rt io u sly interfered with plaintiffs' contracts with Aigner. W a c h o v ia moved to dismiss the amended complaint. The D is tric t Court granted the motion with respect to the breach of c o n tra c t and tortious interference claims but denied it with re sp e c t to plaintiffs' § 1981 and good faith and fair dealing c la im s . Anderson v. Wachovia Mortg. Corp. ("Anderson I"), 4 9 7 F. Supp. 2d 572 (D. Del. 2007). A f te r discovery was nearly complete, plaintiffs filed a s e c o n d amended complaint, which asserted essentially the same leg a l claims as in the first amended complaint but slightly a d ju s te d the supporting factual allegations.4 Wachovia moved fo r summary judgment, and the District Court granted summary ju d g m e n t on the § 1981, breach of contract, and tortious in ter f e re n c e claims. However, the Court remanded the case to s ta te court for consideration of the good faith and fair dealing c la im . Anderson v. Wachovia Mortg. Corp. ("Anderson II"), 6 0 9 F. Supp. 2d 360 (D. Del. 2009). Plaintiffs now appeal the g ra n t of summary judgment, as well as an earlier order denying p lain tiff s' motion to compel certain discovery. Wachovia c ro s s -a p p e als the remand of the good faith and fair dealing c la im .

Plaintiffs had also asserted a claim in the first amended co m p lain t under the Equal Credit Opportunity Act ("ECOA"), 1 5 U.S.C. § 1691, which they voluntarily dismissed with p re ju d ice prior to the District Court's decision on the motion to d is m is s . See Anderson I, 497 F. Supp. 2d at 574 n.1. Plaintiffs o m itte d this claim from the second amended complaint. 9

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T h e District Court had jurisdiction over plaintiffs' claims u n d e r 28 U.S.C. §§ 1331 and 1367. We have jurisdiction over th e appeal and cross-appeal under 28 U.S.C. § 1291. II. W e exercise plenary review of a District Court's grant of s u m m a ry judgment, using the same standard applied by the d i s tric t courts. Fuentes v. Perskie, 32 F.3d 759, 763 (3d Cir. 1 9 9 4 ). Under this standard, the movant must demonstrate that " th e re is no genuine issue as to any material fact and that [it] is e n title d to judgment as a matter of law." Fed. R. Civ. P. 5 6 (c)(2 ). "In reviewing the grant of a motion for summary ju d g m e n t, we (i) resolve conflicting evidence in favor of the n o n m o v a n t, (ii) do not engage in credibility determinations, and (iii) draw all reasonable inferences in favor of the nonmovant." F u e n te s, 32 F.3d at 762 n.1. P la in tif f s' discrimination claims are brought under 42 U .S .C . § 1981, which provides, as relevant here, that "[a]ll p e rs o n s . . . shall have the same right in every State and T errito ry to make and enforce contracts." § 1981(a). "The term `m a k e and enforce contracts' includes the making, performance, m o d if ic a tio n , and termination of contracts, and the enjoyment of a ll benefits, privileges, terms, and conditions of the contractual relatio n sh ip . " § 1981(b). W e have previously applied the tests used to evaluate e m p l o ym e n t discrimination claims brought under Title VII of th e Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., to e m p l o ym e n t discrimination claims brought under § 1981, since 10

"th e substantive elements of a claim under section 1981 are g e n e ra lly identical to the elements of an employment d is c rim in a tio n claim under Title VII." Brown v. J. Kaz, Inc., 5 8 1 F.3d 175, 181-82 (3d Cir. 2009). Thus, both the direct e v id e n c e test introduced by Price Waterhouse v. Hopkins, 490 U .S . 228 (1989), and the burden-shifting framework introduced b y McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), m a y be used to determine whether an employer has d iscrim in ated against a plaintiff in violation of § 1981. See B r o w n , 581 F.3d at 182; Weldon v. Kraft, Inc., 896 F.2d 793, 7 9 6 -9 7 (3d Cir. 1990). This too is a case brought under § 1981, a n d we deem it best to employ the same frameworks in the c o n te x t of claims of discriminatory lending under § 1981. We th u s hold that the direct evidence and McDonnell Douglas tests s h o u ld be applied to lending discrimination claims brought u n d e r § 1981.5

We note that other courts of appeals have similarly a p p l ie d the McDonnell Douglas framework to claims of d is c rim in a tio n in the extension of credit brought pursuant to the E C O A . See Mays v. Buckeye Rural Elec. Coop., Inc., 277 F.3d 8 7 3 , 876 (6th Cir. 2002) ("Given the similar purposes of the E C O A and Title VII, the burden-allocation system of federal e m p l o ym e n t discrimination law provides an analytical f ra m e w o rk for claims of credit discrimination."); MercadoG a r c ia v. Ponce Fed. Bank, 979 F.2d 890, 893 (1st Cir. 1992); T h o m p s o n v. Marine Midland Bank, No. 99-7051, 1999 WL 7 5 2 9 6 1 , at *2 (2d Cir. Sept. 16, 1999). In addition, we and the C o u rt of Appeals for the Eighth Circuit have identified prima f a cie tests for ECOA claims that mirror the elements of the 11

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In doing so, we part ways with the Court of Appeals for th e Seventh Circuit, which opined in Latimore v. Citibank F e d e r a l Savings Bank, 151 F.3d 712 (7th Cir. 1998), that M c D o n n e ll Douglas should be applied only where there is a " b a sis for comparing the defendant's treatment of the plaintiff w ith the defendant's treatment of other, similarly situated p e rs o n s ," and thus not in lending discrimination cases, which typ ic a lly do not involve a "competitive situation" between d if f e re n t borrowers. Id. at 714. In Latimore, the court indicated t h a t a plaintiff can still "try to show in a conventional way, w ith o u t relying on any special doctrines of burden-shifting, that th e re is enough evidence, direct or circumstantial, of d is c rim in a tio n to create a triable issue." Id. at 715. We disagree w ith this approach, as the McDonnell Douglas burden-shifting f ra m e w o rk has generally been used in § 1981 discrimination c a se s and it would be a significant departure, we think, from litig a n ts' settled expectations about the applicable law to single

McDonnell Douglas prima facie test. See Chiang v. Veneman, 3 8 5 F.3d 256, 259 (3d Cir. 2004) ("To establish a prima facie c a se under ECOA [a plaintiff] must show that (1) plaintiff was a member of a protected class; (2) plaintiff applied for credit f ro m defendants; (3) plaintiff was qualified for the credit; and (4 ) despite qualification, plaintiff was denied credit."); Rowe v. U n io n Planters Bank of Se. Mo., 289 F.3d 533, 535 (8th Cir. 2 0 0 2 ) ("[Plaintiff] must demonstrate that (1) she was a member o f a protected class, (2) she applied for and was qualified for a lo a n with the Bank, (3) the loan was rejected despite her q u a lif ic a tio n s , and (4) the Bank continued to approve loans for ap p lica n ts with similar qualifications."). 12

o u t cases involving alleged discriminatory lending practices for d if f ere n t treatment. We will apply a variation of the McDonnell D o u g la s test that requires plaintiffs to show "additional e v id e n c e" under the fourth prong of the test for establishing a p rim a facie case. A s addressed in greater detail below, we do not agree that M c D o n n e ll Douglas is limited to cases where a plaintiff can p ro d u c e evidence of a defendant's treatment of directly c o m p a ra b le individuals. The burden of a § 1981 plaintiff is to " p ro v e purposeful discrimination," and the McDonnell Douglas f ra m e w o rk assists in this endeavor by structuring the evidence o n the issue of "whether the defendant intentionally d is c rim in a te d against the plaintiff." Patterson v. McLean Credit U n io n , 491 U.S. 164, 186 (1989), superseded in part by 42 U .S .C . § 1981(b). Although comparative evidence is often h ig h ly probative of discrimination, it is not an essential element o f a plaintiff's case. Pivirotto v. Innovative Sys., Inc., 191 F.3d 3 4 4 , 353 (3d Cir. 1999). Instead, the permissible evidence u n d e r this framework "may take a variety of forms," including, f o r example, "evidence of [a defendant's] past treatment of" a p la in tif f . Patterson, 491 U.S. at 187-88. A. P la in tif f s contend that they have direct evidence of d is c rim in a tio n and thus need not resort to a McDonnell Douglas a n a lys is . We disagree. D ire c t evidence of discrimination must be "so revealing o f [discriminatory] animus that it is unnecessary to rely on the 13

[ M c D o n n e ll Douglas] burden-shifting framework, under which th e burden of proof remains with the plaintiff." Walden v. G e o rg ia -P a c ific Corp., 126 F.3d 506, 512 (3d Cir. 1997). Once a plaintiff produces such evidence, the defendant has the burden o f producing evidence to show that it would have made the same d e c is io n in the absence of discriminatory animus. Id. at 512-13. T o qualify as direct evidence, "the evidence must be such th a t it demonstrates that the `decisionmakers placed substantial n e g a tiv e reliance on an illegitimate criterion in reaching their d e c is io n . ' " Walden, 126 F.3d at 513 (quoting Price W a t e rh o u s e , 490 U.S. at 277 (O'Connor, J., concurring)). Thus, d ire c t evidence must satisfy two requirements. First, the e v id e n c e must be strong enough "to permit the factfinder to in f e r that a discriminatory attitude was more likely than not a m o tiv a ti n g factor in the [defendant's] decision." Id. (internal q u o ta tio n marks and alteration omitted). Second, the evidence m u s t be connected to the decision being challenged by the p la in tif f . Id. at 515-16. Specifically, any statements made by a d e f en d a n t's employees must be made at a time proximate to the c h a lle n g e d decision and by a person closely linked to that d e c is io n . Id. at 513-16. We have referred to these requirements a s creating a "high hurdle" for plaintiffs. Id. at 513. P la in tif f s have not cleared this hurdle. For the direct e v id e n c e test they rely exclusively on Hogsten's alleged c o m m e n t s that "you people don't understand how the process w o rk s ," JA387, and that "you people don't understand the loan

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p r o c e s s , " JA448.6 We are skeptical that Hogsten's use of the p h ra se "you people" in this context is, alone, so revealing of d isc rim in a to ry animus that it would enable a factfinder to c o n c lu d e that a discriminatory attitude was, more likely than not, a motivating factor in the decision to impose the challenged loan c o n d itio n s . Although plaintiffs cite various cases in support of th e ir argument that the phrase "you people" should be co n sid e red direct evidence, none of these cases actually support th e ir position. See, e.g., Whitley v. Peer Review Sys., Inc., 221 F .3 d 1053, 1056 (8th Cir. 2000) (using the phrase "you people" a s evidence in a McDonnell Douglas analysis, and finding its u se "innocuous"); EEOC v. Alton Packaging Corp., 901 F.2d 9 2 0 , 923, 924 (11th Cir. 1990) (finding that the use of the phrase " yo u people" was a "stray remark" that would not satisfy the d ire c t evidence test). Instead, several courts have determined t h a t the phrase "you people" is too ambiguous to constitute d ire c t evidence of discrimination when used in isolation, as it w a s here. See, e.g., Estate of Daramola v. Coastal Mart, Inc., 1 7 0 F. App'x 536, 547 (10th Cir. 2006) ("After all, they are your p e o p le." ); Clay v. Interstate Nat'l Corp., No. 95-3430, 1997 WL 4 5 2 3 1 6 , at *1, *3 (7th Cir. Aug. 7, 1997) ("You people are c a u sin g problems."); Steinhauser v. City of St. Paul, 595 F. S u p p . 2d 987, 1004 (D. Minn. 2008) ("I don't think you people d e se rv e to be in this country."); Kishaba v. Hilton Hotels Corp., 7 3 7 F. Supp. 549, 566 (D. Haw. 1990) ("I don't know how you p e o p le run things down here . . . ." and "Why can't you people g et things organized?").

Hogsten was not asked about these statements during h is deposition. 15

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E v e n if we were persuaded that the use of the phrase " yo u people" in this context could constitute direct evidence, h o w ev er, plaintiffs have not shown that Wachovia's d e c is io n m a k e rs -- F a z z in o , Hamm, and Akerley--relied on p l a in t if f s ' race in imposing the challenged loan conditions. A c c o rd in g to the evidence offered by Wachovia, it was not H o g s te n who decided to impose the challenged conditions on p l a in t if f s ' loans. Rather, Hogsten denied imposing any of these c o n d itio n s . With respect to the Anderson loan, Hogsten testified th a t he told Mr. Anderson that "we were going to have problems g e t t i n g a sufficient appraisal unless there [were] some . . . re n o v a t io n s to the property to get a decent appraisal." JA457. H o w e v e r, since Hogsten did not underwrite loans, he testified th a t "[w]hat I did for Mr. Anderson is tell him what is normally d o n e , and an underwriter would then make the decision as to w h a t if anything would be done." JA460. With respect to the W h e a tle y loan, Hogsten testified that after being told by the u n d e rw rite r that the appraisal indicated problems with the h a b ita b i lity of the Wheatley property and that the Wheatleys' d o w n payment would need to be increased, he communicated th o s e problems to Mr. Wheatley. H o g s te n 's testimony is corroborated by the testimony of h is supervisor, Joseph Skowronski, who testified that loan o f f ic e r s like Hogsten do not impose conditions on loans, a lth o u g h they may discuss with customers the conditions im p o se d by others. He described Hogsten's role as limited to s e llin g loans and communicating requirements to customers. A c c o rd in g to Skowronski, it is the underwriters, not loan o f f ic e rs like Hogsten, who impose loan conditions. Fazzino also te stif ied that Hogsten was not a decisionmaker, and that Hogsten 16

re p e ate d ly urged her to approve the Wheatley loan without the c o n d itio n s that she and Hamm had imposed. This indicates that H o g s t e n lacked the authority to impose (or remove) the c o n d itio n s himself. Fazzino also testified that she and Hamm im p o s e d the challenged conditions on the Wheatley loan, and A k e rle y submitted an affidavit indicating that he flagged the p o te n tia l problem with the Wilkins loan. Plaintiffs have offered no evidence to refute this te stim o n y. Although they contend that Hogsten acted as if he w ere the decisionmaker when communicating Wachovia's re q u ire m e n ts to them, this contention does not create a genuine is s u e of fact regarding the salient question of whether Hogsten a c tu a lly was a decisionmaker who imposed the conditions. S in c e plaintiffs do not contend that Fazzino, Hamm, or Akerley h a rb o re d discriminatory intent--and there is no evidence that th e y did--the District Court properly rejected plaintiffs' claims to the extent that they rely on the direct evidence test. B. In the absence of direct evidence of discrimination, we co n sid e r a plaintiff's claims under McDonnell Douglas. This f a m ilia r framework requires the following three-step analysis. T h e plaintiff must first establish a prima facie case of d is c rim in a tio n . In Burdine, the Supreme Court explained that " [ t]h e burden of establishing a prima facie case of disparate t re a t m e n t is not onerous." Tex. Dep't of Cmty. Affairs v. B u r d in e , 450 U.S. 248, 253 (1981). The goal at this stage is to " e lim in a te [ ] the most common nondiscriminatory reasons" for 17

th e defendant's actions; by doing so, the prima facie case creates a n inference that the defendant's actions were discriminatory. Id . at 254. If a plaintiff makes out a prima facie case, then the " b u rd e n of production shifts to the defendant to offer evidence o f a legitimate, nondiscriminatory reason for the action." C o n n o r s v. Chrysler Fin. Corp., 160 F.3d 971, 974 n.2 (3d Cir. 1 9 9 8 ). The defendant satisfies its burden at this step "by i n tro d u c in g evidence which, taken as true, would permit the c o n c l u s io n that there was a nondiscriminatory reason for the u n f a v o ra b le [action]." Fuentes, 32 F.3d at 763. The defendant n e e d not even prove that the tendered reason was the actual re a s o n for its behavior. Id. A t the third step, "the burden of production rebounds to th e plaintiff, who must now show by a preponderance of the e v id e n c e that the [defendant's] explanation is pretextual." Id. A t this stage, a plaintiff may defeat a motion for summary ju d g m e n t by either discrediting the defendant's proffered rea so n s or adducing evidence that discrimination was "more lik e ly than not a . . . determinative cause of the adverse . . . a c tio n ." Id. at 764.7 "[T]hroughout this burden-shifting

Fuentes speaks of a "motivating or determinative c a u s e ," but, to be precise, the terminology of "motivating" ca u ses is inapt when discussing the burden-shifting framework in a pretext case such as this. See Watson v. SEPTA, 207 F.3d 2 0 7 , 211 (3d Cir. 2000) (holding that the 1991 Civil Rights Act d id not affect "the distinction between the standards of causation 18

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p a ra d ig m the ultimate burden of proving intentional d is c rim in a tio n always rests with the plaintiff." Id. at 763. 1. W e have not previously identified the elements of a p rim a facie case of lending discrimination in a suit brought u n d e r § 1981. The District Court therefore applied a prima facie te st containing the following three elements: "(1) Plaintiffs w e re members of a protected class; (2) Plaintiffs applied for and w e re extended credit from Defendant; and (3) Defendant treated P la in t if f s differently than others outside of the protected class w h o were otherwise similarly situated." Anderson II, 609 F. S u p p . 2d at 369.8 The Court determined that plaintiffs satisfied th e first two elements of this test, but not the third. The Court

applicable in, on the one hand, so-called `mixed-motive' cases, in which . . . a defendant may be held liable upon a showing that a n illegitimate factor was a `motivating' factor in the adverse a c tio n and, on the other hand, so-called `pretext' cases, in which . . . a defendant may be held liable upon a showing that an ille g itim a te factor was a `determinative' factor in the adverse a c t io n " ) . The District Court borrowed this test from Visconti v. V e n e m a n , No. 01-cv-5409, 2005 WL 2290295, at *4 (D.N.J. S e p t. 20, 2005), a case brought under the ECOA and "based not o n [the plaintiffs'] application for (and denial of) credit but, ra th e r, on the [defendant's] collection efforts regarding credit th a t had already been extended." 19
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a lso found that, even if plaintiffs had made out a prima facie ca se, Wachovia had proffered legitimate nondiscriminatory re a so n s for its actions, and that plaintiffs had not adequately re b u tted those reasons so as to show them to be pretextual. A lth o u g h we agree with the District Court's ultimate c o n c lu sio n that plaintiffs did not carry their burden as to pretext, w e disagree as to the nature of the showing to be made to e sta b lis h a prima facie case in a case such as this. The District C o u rt required plaintiffs to produce evidence that they were tr e a te d differently from similarly situated mortgage applicants. H o w e v e r, the critical question in this case is not simply whether p lain tiff s were subjected to different conditions than white m o rtg a g e applicants; rather, the allegation is more layered. G ran ted , it is, in part, whether they were subjected to more o n e ro u s conditions because of their race--that is, because they w e re African-Americans--but, also, because they intended to m o v e into a "white" community. Notably, plaintiffs had p revious borrowing experience with Wachovia without incident, s o it is this latter aspect that distinguishes this situation, and c a lls for an approach to the last prong that is tailored to the n a tu re of the claim. The issue is, were barriers put in their way b e c a u se of their race in order to dissuade them from moving into a "white" community? Given this, and given the n o n c o m p e titiv e nature of the lending business--an applicant d o e s not lose a loan to another applicant--comparisons among b o rro w ers do not get to the heart of the matter. Moreover, re q u irin g plaintiffs to ferret out, and the bank to produce, e v id e n c e as to others with myriad different factual situations in o rd e r to find "similar" borrowers, goes beyond what is required f o r a prima facie case. 20

W e have repeatedly stated that comparative, or c o m p e titiv e , evidence is not a necessary component of a d isc rim in a tio n plaintiff's prima facie case. As we have said in th e context of employment discrimination, "a plaintiff need not p ro v e , as part of her prima facie case, that she was replaced by so m e o n e outside of the relevant class," since an inability to m a k e this showing "is not necessarily inconsistent with her d e m o n s tra tin g that the employer treated her less favorably than o th e rs because of her race, color, religion, sex, or national o rig in ." Pivirotto, 191 F.3d at 353 (quoting Furnco Constr. C o r p . v. Waters, 438 U.S. 567, 577 (1978) (internal quotation m a rk s and alteration omitted)); see also Matczak v. Frankford C a n d y & Chocolate Co., 136 F.3d 933, 939 (3d Cir. 1997) ("By h o ld in g that favorable treatment outside the protected class is an `a lte rn a tiv e ' element to a prima facie case, we [have] made clear th a t this element can be present but by no means must be p re se n t." ).9 This precedent is controlling.1 0

Indeed, we have traced our suggestions that c o m p a ra tiv e evidence might be required to "occasionally im p re c is e language in dicta in certain cases." Pivirotto, 191 F .3 d at 357. Wachovia relies in part on our decision in Ezold v. W o lf, Block, Schorr & Solis-Cohen, 983 F.2d 509, 527 (3d Cir. 1 9 9 2 ), in which we considered comparative evidence to evaluate th e plaintiff's claims. Ezold does not support Wachovia's a rg u m e n t. First, we only considered the comparative evidence p r o f f e re d by the plaintiff in Ezold at the final stage of the M c D o n n e ll Douglas analysis, in order to determine whether the 21
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A s noted above, a plaintiff's burden at the prima facie s ta g e is not intended to be "onerous"; rather, the purpose of the p rim a facie test is to "eliminate[] the most common n o n d is c rim in a t o ry reasons" for the defendant's actions. B u r d in e , 450 U.S. at 253-54. Thus, we have stated that the f o u rth prong of the prima facie case should be "relaxed in c e rta in circumstances." Pivirotto, 191 F.3d at 357 (quoting T o r re v. Casio, Inc., 42 F.3d 825, 831 (3d Cir. 1994)). Requiring plaintiffs to produce comparative evidence in cases i n v o lv i n g the lending process would not be productive due to t h e discrete and varying circumstances inherent in individual lo a n applications and approvals. In d e e d , McDonnell Douglas itself did not require a sh o w in g as to "similarly situated" individuals. In McDonnell

defendant's asserted nondiscriminatory reasons were pretextual. S e c o n d , even at the pretext stage of the analysis, we did not r e q u i re comparative evidence. To the contrary, we recognized, fo r instance, that "sufficiently strong evidence of an employer's p a st treatment of a plaintiff may prove pretext." 983 F.2d at 5 3 9 . This is consistent with the Supreme Court's statement in P a tte rs o n , 491 U.S. at 187-88, that "[t]he evidence which [a p la in tif f ] can present in an attempt to establish that [a d e f en d a n t's ] stated reasons are pretextual may take a variety of f o rm s ," and its acknowledgment in McDonnell Douglas, 411 U .S . at 804-05, that evidence of pretext could include the d e f en d a n t's "treatment of [the plaintiff] during his prior term of e m p l o ym e n t; [and the defendant's] reaction, if any, to [the p la in tif f 's ] legitimate civil rights activities." 22

D o u g la s , the Court held that a prima facie case of racial d isc rim in a tio n in an employment discrimination case generally re q u ire s a plaintiff to show "(i) that he belongs to a racial m in o rity; (ii) that he applied and was qualified for a job for w h ich the employer was seeking applicants; (iii) that, despite his q u a lif ic a tio n s , he was rejected; and (iv) that, after his rejection, . . . the employer continued to seek applicants from persons of c o m p l a in a n t' s qualifications." 411 U.S. at 802. The Court also n o te d that this test should be tailored to conform "to differing f a ctu a l situations." Id. at 802 n.13. W h e n invoking McDonnell Douglas for lending d is c rim in a tio n claims brought under § 1981, the first three th in g s a plaintiff must show at the prima facie stage are (1) that h e belongs to a protected class, (2) that he applied and qualified f o r available credit from the defendant,1 1 and (3) that his

We note that whether a plaintiff is "qualified" for a lo a n under the third prong should focus on the general form of cre d it and qualifications for such credit rather than on every p o ss ib le condition that might need to be fulfilled to proceed to clo s in g . Just as in the employment context "qualifications" are th e minimum prerequisites, and do not include every c o n c eiv a b le trait that an employer desires in an employee, here, th e qualifications should encompass minimum requirements. F o r instance, a plaintiff who applied for a home mortgage o f f e re d by the defendant only to borrowers of a certain income le v e l should be required to establish that the defendant was is s u in g home mortgages, and that the borrower satisfied the in c o m e requirement established by the lender for that type of 23

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a p p lica tio n was denied or that its approval was made subject to u n re a so n a b le or overly burdensome conditions.1 2 In the e m p l o ym e n t context, we have held that the fourth prong of the p rim a facie case may be established by satisfying the original f o u rth prong articulated in McDonnell Douglas, or, as an a lte rn a ti v e to the original fourth prong, by showing that

loan. Wachovia contends that denial of the loan is necessary to give rise to an inference of discrimination, and thus that only b o rro w e rs whose loan applications are denied can make out a p rim a facie case. It urges that the imposition of restrictive c o n d itio n s by a lender cannot support "a prima facie case of d is c rim in a tio n as traditionally understood." Appellees' Opening B r. at 34. We disagree. Section 1981 specifically brings d iscrim in ato ry conditions into its ambit by defining "the term `m a k e and enforce contracts' [to] include[] . . . the enjoyment of a ll benefits, privileges, terms, and conditions of the contractual re la ti o n sh ip ." § 1981(b). Thus, § 1981 is violated not only w h e n a lender discriminatorily rejects applicants, but also when th e lender engages in other conduct that amounts to d is c rim in a tio n with respect to the "terms" and "conditions" of th e borrower's contractual relationship with the lender. Indeed, in the employment context we have modified the third prong of th e McDonnell Douglas prima facie case to require evidence of a n adverse employment action, as opposed to outright rejection. S e e Jones v. Sch. Dist. of Phila., 198 F.3d 403, 411 (3d Cir. 1 9 9 9 ). We see no reason why a similar modification should not b e made to the third prong in the credit context. 24
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sim ilarly situated individuals outside the plaintiff's class were tre a te d more favorably. Matczak, 136 F.3d at 939-40; Olson v. G e n . Elec. Astrospace, 101 F.3d 947, 951 (3d Cir. 1996). H o w e v e r, as plaintiffs rightly point out, "[t]his is not an e m p lo ym e n t case where it is frequently easy to identify similarly situ ated individuals." Appellants' Op. Br. at 33. Further, re q u irin g evidence of similarly situated individuals in the len d in g context would be overly burdensome during discovery b e c a u s e it would require banks to turn over hundreds of loan a p p lic a tio n s -- o n c e confidentiality issues are addressed--and th e parties would likely have considerable difficulty determining w h ich applicants are similarly situated. Thus, we agree with p lain tif f s that they should not be required to satisfy the fourth p ro n g of the McDonnell Douglas prima facie case as it has been a rtic u la te d in the employment context, so long as in some other w a y they are able to show "circumstances which give rise to an i n f e re n c e of unlawful discrimination." Burdine, 450 U.S. at 253. T h e question, then, is what will suffice to satisfy the last p ro n g of the prima facie case in the lending discrimination c o n te x t. The Court of Appeals for the Sixth Circuit had o c c as io n in Lindsay v. Yates, 578 F.3d 407 (6th Cir. 2009), to c o n sid e r a discrimination claim in connection with a real estate tra n sa c tio n . The seller had terminated the agreement of sale w ith in a few days after meeting the buyers--who happened to b e African-American--twelve days after signing the agreement, d e c id in g not to sell the house "`for sentimental reasons.'" Id. at 4 1 2 . The court noted the flexibility of McDonnell Douglas and th e fact that in Shah v. General Electric Co., 816 F.2d 264 (6th 25

C ir. 1987), an employment discrimination case, it had previously in d ic a te d that it was enough if a plaintiff could adduce "`some a d d i t i o n al evidence'" to establish the "`inference of d is c rim in a tio n .'" Id. at 416 (quoting Shah, 816 F.2d at 269). In S h a h , the court had concluded that the fact that a position did n o t remain available was not fatal to the claim, as long as there e x is te d "`additional evidence' from which a reasonable juror c o u ld find an inference of discrimination." Lindsay, 578 F.3d a t 416 (quoting Shah, 816 F.3d at 269). While noting that " c o m p a ra tiv e evidence" could constitute "additional evidence," th e court stated that McDonnell Douglas and its progeny do not r e q u i re this. Id. at 417. The inquiry "was never intended to be rig id , mechanized, or ritualistic. Rather, it is merely a sensible, o rd e rly way to evaluate the evidence in light of common e x p e rie n c e as it bears on the critical question of discrimination." Id . (internal quotation marks and citation omitted). The court th e n reasoned: A prima facie case is established w h e n e v er the actions taken by the p r o p e r t y owner lead one to re a so n a b ly infer, if such actions rem ain unexplained, that it is more lik e ly than not that such actions w ere based on discriminatory c riter io n such as race. Keeping this u ltim a te inquiry in mind, we find t h a t so long as "additional e v id e n c e" exists--beyond showing th e first three elements of the M c D o n n e l l Douglas test--that 26

in d ica tes discriminatory intent in " lig h t of common experience," the required "inference of d isc rim in a tio n " can be made in s a tis f a ctio n of the prima facie case. T h is holds true even if the plaintiff is not necessarily able to identify s i m i l a r l y - s i t u a t e d in d i v i d u a l s o u t s id e of the relevant protected g ro u p who were treated more f a v o r a b l y. T h e "additional evidence" w h ich can be relied upon to e sta b lish a prima facie claim d e p e n d s on the attendant facts and c ir c u m s ta n c es . In this case, the suspicious tim ing of the te rm in a tio n of the purchasing ag ree m e n t provides the evidentiary b a s is for inferring the [defendants] a c te d with discriminatory motives. Id . at 417-18 (internal quotation marks and citations omitted). W e adopt this approach. In order to make out a prima f a cie case of lending discrimination in a § 1981 case, a plaintiff m u s t show (1) that he belongs to a protected class, (2) that he a p p lie d and was qualified for credit that was available from the d e f e n d a n t, (3) that his application was denied or that its a p p ro v a l was made subject to unreasonable or overly 27

b u rd e n so m e conditions, and (4) that some additional evidence e x is ts that establishes a causal nexus between the harm suffered a n d the plaintiff's membership in a protected class, from which a reasonable juror could infer, in light of common experience, th a t the defendant acted with discriminatory intent. H e re , all of the plaintiffs are African-American, applied f o r types of mortgage loans being offered by Wachovia, and w e re qualified for these loans.1 3 Thus, they satisfy the first and s e c o n d prongs of the prima facie case. Whether the plaintiffs h a v e satisfied the third and fourth prongs is a closer call. As to the third prong, with respect to the Wilkinses, we a re not persuaded that it was unduly burdensome for Wachovia to have required them to use their own assets, rather than assets e f f e c tiv e ly borrowed from their credit card issuer, to fund their e sc ro w payment. However, with respect to the Andersons and th e Wheatleys, we agree that it may be unreasonable or overly b u rd e n so m e to require a borrower to make improvements to a p ro p e rty he does not own, and to double the amount of the b o rro w e r's down payment at the last minute.1 4

Although Mr. Wheatley's credit score was not s u f f ic ie n t to qualify him for the non-income-verification loan he in itia lly sought, it appears that the Wheatleys were qualified for th e stated income loan and the exception loan that they s u b s e q u e n tly pursued. The third prong could also be satisfied by evidence that th e complained-of conditions, even if facially reasonable, were 28
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A s to the fourth prong, the evidence that would connect th e conditions to racial animus is not that clear. Plaintiffs have p ro d u c e d some evidence that the conditions may have been im p o s e d because they were African-Americans moving into a p re d o m in a n tly Caucasian neighborhood. A Wachovia e m p l o ye e , Deanne Wicks, told Mr. Anderson that "[t]here are a lo t of people that are not happy" with plaintiffs' purchase of h o m e s in Silver Lake, which she described as a "lily white c o m m u n ity." JA384-85. Hogsten allegedly said that he was " g e ttin g a lot of pressure on this transaction" and referred to p lain tiff s as "you people," JA387, JA398, potentially c o rro b o ra tin g Wicks's statements. Moreover, plaintiffs had not e x p e rie n c ed similar treatment when purchasing homes, using W a c h o v ia financing, in other neighborhoods. Together, this e v id e n c e may be sufficient to support at least an inference that W a c h o v ia imposed the conditions it did for racially d is c rim in a to ry reasons. On the other hand, the timing of the s e lle rs ' change of heart in Lindsay certainly supplies a stronger n e x u s between the complained-of conduct and the plaintiffs' ra c e . Regardless of whether plaintiffs have in fact satisfied the t h i r d and fourth prongs, the conditions were grounded in a p p lic a b le regulations, as we explain below, so even if plaintiffs c o u ld convince us that they had made out a prima facie case,

not applied evenhandedly among individuals of different races. S u c h conditions are per se unreasonable and/or unduly b u rd e n so m e for purposes of the McDonnell Douglas analysis. H e re , there is no such evidence. 29

th e y must clear an additional hurdle at the third stage of the M c D o n n e ll Douglas analysis. 2. W a c h o v ia urges that it carried its burden of production at th e second stage of McDonnell Douglas by tendering n o n d is c r i m i n a t o ry reasons for all of its actions, because all of th e conditions it imposed were driven by its underwriting g u id e lin e s and by the requirements imposed by Fannie Mae (w h ich parallel Wachovia's own guidelines). Wachovia sells m o st of its residential mortgages to Fannie Mae, and Fannie M a e will not purchase loans that do not comply with its req u irem en ts. Thus, Wachovia contends that its underwriters a re obligated to ensure that these requirements are satisfied b e f o re approving a loan. A c c o rd in g to Wachovia, the repair requirements for the A n d e rs o n and Wheatley properties were necessitated by u n d e rw riting guidelines that require a home to be inhabitable a n d an appraisal to be completed before a mortgage can be is s u e d . Under these guidelines, a property may not "have any p h ysic a l deficiencies or conditions that would affect its liv a b ility." JA302. When there are such problems, "the p ro p e rty must be appraised subject to completion of the specific a ltera tio n s or repairs," and Wachovia "must obtain a certificate o f completion from an appraiser before it delivers the mortgage to the investor." JA302. T h e appraiser retained by Wachovia to evaluate the A n d e rs o n property, John Mullens, informed Hogsten that he 30

c o u ld not appraise the property because there were significant p ro b le m s with its livability. Mullens stated that there was "ex ten siv e water damage," some missing drywall, mold on some o f the remaining drywall, and exposed, water-damaged in s u l a tio n . JA352. He explained that because of these p ro b le m s , he "determined that he could not appraise the p ro p e rty" without, at a minimum, an assessment by a mold s p e c ia lis t, a plumbing certification, certifications that the water h a d not damaged the structure or electrical systems, and an e stim a te from a contractor of the costs to repair the damage. JA 3 5 2 -5 3 . Mullens also stated that he "knew of no comparable p ro p e rtie s in the Dover area that were in a similar state of d i sr e p a ir and in a similar location," and thus could not appraise th e property without the repairs. JA353. A n appraiser was able to determine the value of the W h ea tle y property, but stated in his appraisal report that there w a s no heat on the second floor, that the roof needed repair, that th e second floor landing needed a "`finished floor covering,'" a n d that some of the basement pipes appeared to be wrapped w ith asbestos. JA428-29. According to Fazzino, these p ro b le m s raised concerns about the livability of the property and n e c e s sita ted repairs. On August 4, the appraiser sent a c e rtif ic a te to Fazzino stating that the repairs had been c o m p l e te d . However, the report indicated that the appraiser was re lyi n g on a contractor's statement that the "roof was in a d eq u ate condition with no known leakage," which the appraiser h a d "assumed to be accurate." JA321. Fazzino determined that s h e could not rely on this assumption, and therefore required the W h e a tle ys to obtain a roofing certificate to show that the p ro p e rty was inhabitable. 31

A c c o rd in g to Wachovia, the other conditions imposed on th e Wheatley loan resulted from an effort to approve the loan d e sp ite the livability problems, in light of Aigner's mandate that a ll three transactions settle at one time. An "exception loan" w a s eventually approved for the Wheatleys by an "exception o f f ic e r" named Terri Hamm, in part because Mr. Wheatley was a "five star customer." JA469. This meant that the Wheatley lo a n would be maintained in Wachovia's own portfolio, without b e in g sold to Fannie Mae, and could thus be approved under d if f ere n t guidelines. However, reclassifying the loan as an e x c ep tio n loan triggered a new requirement under the u n d e rw r it in g guidelines, which specify that an exception loan m a y only be issued if the customer makes a 20% down payment; th u s , the Wheatleys would no longer be permitted to make a 1 0 % down payment as they had planned. The Wheatleys d e c id e d to obtain the additional 10% from the assets of their b u s in e ss , but that triggered another requirement under the u n d e rw ritin g guidelines: that an accountant "confirm that the b o rro w e r files the business on the Schedule C" of his tax return. JA 308. T h e se reasons suffice to satisfy Wachovia's burden of p ro d u c tio n , which demands only that it "introduc[e] evidence w h ic h , taken as true, would permit the conclusion that there was a nondiscriminatory reason" for the adverse action. Fuentes, 32 F .3 d at 763. Although plaintiffs argue that Wachovia failed to m ee t its burden at the second stage of this analysis, it appears th a t this argument is actually directed at the issue of pretext, and w e will consider it in that context.

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3. A t the third stage of the McDonnell Douglas analysis, a p la in tif f "may defeat a motion for summary judgment by either (i) discrediting the proffered reasons, either circumstantially or d ire c tly, or (ii) adducing evidence, whether circumstantial or d ire c t, that discrimination was more likely than not a . . . d e te rm in a tiv e cause of the adverse . . . action." Fuentes, 32 F.3d a t 764. The plaintiff can discredit the proffered reasons by " d e m o n s t r a t [ i n g ] such weaknesses, im p l a u s i b i l i t i e s , in c o n sis te n c ie s, incoherencies, or contradictions in the [ d e f e n d a n t' s] proffered legitimate reasons for its action that a rea so n ab le factfinder could rationally find them unworthy of c re d e n ce , and hence infer that the [defendant] did not act for the a ss e rte d non-discriminatory reasons." Id. at 765 (internal q u o t a t i o n marks, alteration, and citations omitted). A lte r n a tiv e l y, to show that discrimination was the likely cause o f the adverse action, a plaintiff can show, for example, that the d e f e n d a n t had previously subjected the same plaintiff to "u n law fu l discriminatory treatment," that it had "treated other, sim ilarly situated persons not of his protected class more fa v o rab ly," or that it had "discriminated against other members o f his protected class or other protected categories of persons." Id . We conclude that plaintiffs have not offered sufficient e v id e n c e of pretext to survive summary judgment. Plaintiffs h a v e produced no evidence to support their contention that W a c h o v ia 's reliance on its underwriting guidelines and the F a n n ie Mae requirements was pretextual. There is no evidence th a t the Anderson loan could have been approved without 33

re p a i r s to the property, or that the Wheatley loan could have b e e n approved as a conventional loan without repairs to the p ro p e rty or as an exception loan without a 20% down payment a n d verification by an accountant. Despite plaintiffs' co n ten tio n s to the contrary, the underwriting guidelines are c o n sis te n t with all of these requirements. Although plaintiffs do n o te that the Fannie Mae guidelines were inapplicable to the W h e a tle y loan because it was ultimately approved as an " e x ce p tio n loan," this does not undermine Wachovia's reliance o n its underwriting guidelines; the reclassification as an e x c e p tio n loan occurred very late in the process, after Wachovia h a d already indicated that it could not approve the Wheatley lo an without repairs. Plaintiffs do not dispute that the repairs re q u ire d by Wachovia were necessary to make the Anderson and W h e a tley properties livable; in fact, Mr. Wheatley conceded this a s to his property during his deposition. P lain tiff s argue that Wachovia's reliance on its u n d e rw riting guidelines is pretextual because Wachovia d e v ia te d from its procedures by allowing Hogsten (rather than F a z z in o , Akerley, and Hamm) to impose the loan conditions on p la in tif f s. We have recognized that "[a] violation of company p o lic y can constitute a pretext for unlawful discrimination" u n d e r certain circumstances. Goosby v. Johnson & Johnson M e d ., Inc., 228 F.3d 313, 322 (3d Cir. 2000). Here, however, th ere is no evidence that any Wachovia procedures were v io late d , since there is no evidence that Hogsten improperly im p o se d loan conditions. Indeed, as discussed in more detail a b o v e with regard to the direct evidence test, the evidence s h o w e d that F a z z i n o , A k e r l e y , and Ha m m -- n o t H o g s te n -- a c tu a lly imposed the conditions, while Hogsten 34

c o m m u n ic a te d them to plaintiffs. Plaintiffs have not offered any e v id e n c e to refute this or to otherwise demonstrate that W a c h o v i a deviated from its policies. P la in tif f s also compare their experiences in the Silver L a k e transaction with their experiences in other real estate tra n sa c tio n s . They claim that Wachovia and other banks did not im p o s e similar conditions on their loans in the other tra n sa c tio n s , which assertedly did not involve property located i n a predominantly Caucasian neighborhood. However, those tra n sa c tio n s are not readily comparable to the Silver Lake tra n sa c tio n : they appear not to have involved a requirement that th re e sales happen simultaneously, on an accelerated timetable, a n d many involved investment properties, which are not subject to the Fannie Mae requirements. Moreover, plaintiffs have o f f e re d no demographic evidence to substantiate their claims th a t the racial makeups of the communities involved in those o th e r transactions were meaningfully different from that of the S ilv e r Lake area. These anecdotal comparisons are thus not p ro b a tiv e of discrimination in this case. P lain tiff s also suggest that Hogsten is not credible b e c au s e he testified that he did not know the racial makeup of th e Silver Lake community, but, according to an affidavit s u b m itte d on plaintiffs' behalf, "[a]nyone who has ever lived for a n y period of time in Dover would know that . . . the homes a ro u n d Silver Lake in Dover were almost all owned by white f a m ilie s." JA191. However, this affidavit is unsupported by a n y data or other evidence, and does nothing more than recite th e personal viewpoint of one member of the Dover community. It is also inconsistent with census data in the record, which show 35

th a t 29.6% of the 544 residents of the "census tract" in which p la in tif f s' houses were located were African-American. JA 2 6 3 .1 5 Accordingly, the affidavit would not suffice to c o n v in c e a reasonable factfinder that Wachovia's proffered re a so n s were unworthy of credence, especially in the face of F a z z in o 's testimony and the clear language of the underwriting g u id e lin e s, both of which corroborated Hogsten's explanations o f why Wachovia imposed the conditions that it did. Nor are we p e rsu a d e d by plaintiffs' argument that Fazzino lacked credibility b e c au s e she could not remember certain details of the Silver L a k e transactions during her deposition. That claim is belied by th e record, as Fazzino was able to testify in considerable detail a f te r refreshing her recollection with notes and other documents. F in a l ly, plaintiffs cite Hogsten's unfriendly attitude, use o f the phrase "you people," and the comment that he was r e c e iv i n g "pressure" regarding the transactions.1 6 They also

The same data show considerable variation in the racial c o m p o s itio n of the other areas bordering Silver Lake. Although a small area bordering the Silver Lake waterfront falls in the d e m o g r a p h ic category of "0-7.7%" African-Americans, and a n o th e r area falls into the "8.3-24.5%" category, the majority of th e waterfront is made up of over 24.9% African-Americans. JA 263. Hogsten did not recall referring to "pressure" in c o n v e rs a tio n s with plaintiffs, but explained that the comment m a y have referred to the pressure of "getting all [the plaintiffs] to the settlement table all at the same time," and given such a 36
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p o in t to the comment by Wicks that "a lot of people . . . are not h a p p y" with the Silver Lake sale, apparently because plaintiffs w e re moving into "an exclusive lily white community." JA384, 3 8 5 . When we give plaintiffs the benefit of any inferences that ca n be drawn, as we must when reviewing a grant of summary ju d g m e n t, these comments, taken together, might hint at d iscrim in atio n . However, a rational jury could not say they are s u f f ic ie n t to show, by a preponderance of the evidence, "that d is c rim in a tio n was more likely than not a . . . determinative c a u s e of" Wachovia's actions. Fuentes, 32 F.3d at 764. Nor do th e y suffice to discredit the nondiscriminatory reasons proffered b y Wachovia by demonstrating such weaknesses in those re a so n s that a reasonable juror could rationally find them u n w o rth y of credence. Id. at 765. Moreover, the loans were u ltim a te ly approved and the sales did close. While not c o n c lu s iv e , this tends to detract from a finding of purposeful d is c rim in a tio n . It was therefore proper for the District Court to enter

short time frame, which was especially difficult because of "the p r o p e r tie s " and the bank's "guidelines." JA459. In other words, "th e pressure was from the underwriter," and "from Mr. A n d e rs o n because he was the spokesman for all three of the loan a p p lic a tio n s " and was calling Hogsten every day about them. J A 4 5 9 . Hogsten denied having received any pressure from any m e m b e r s of the Silver Lake community. However, he was not a sk e d during his deposition to comment on his alleged use of the p h ra s e "you people." 37

s u m m ary judgment in Wachovia's favor on the § 1981 claim.1 7 I I I. P lain tiff s argue that the District Court inappropriately g ra n te d summary judgment on their breach of contract claim. A s noted above, we exercise plenary review of a district court's g ra n t of summary judgment. T h e District Court initially dismissed this claim in d e c id in g Wachovia's motion to dismiss. The Court concluded th a t plaintiffs had not satisfied the requirement of Delaware law th a t a breach of contract claim identify the contractual provision th at was allegedly breached. Anderson I, 497 F. Supp. 2d at 5 8 1 . Plaintiffs then filed a second amended complaint, which re ta in e d the breach of contract claim. The only changes p la in tif f s made to this claim in the second amended complaint w e re to replace the phrase "[b]reach of contract for a mortgage" w ith the phrase "[b]reach of the mortgage application contract" a n d to adjust the amount of damages that they claimed. JA616, J A 6 2 0 , JA624.

Plaintiffs also argue that the entry of summary ju d g m e n t was inappropriate because they had been denied d is c o v e ry about Wachovia's mortgage approval rates. Since, as w e discuss above, plaintiffs should not have been required to p ro d u c e comparative evidence, this argument is moot. In any e v e n t, we would not consider such an argument in light of p la in tif f s ' failure to file an affidavit under Rule 56(f). See, e.g., B r a d le y v. United States, 299 F.3d 197, 207 (3d Cir. 2002). 38

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W a c h o v ia then moved for summary judgment. Although th e motion did not explicitly address the breach of contract c la im , it did indicate that Wachovia was seeking judgment on w h a t it said were the only two claims remaining in the case (the § 1981 and good faith and fair dealing claims), and it was not s tyle d as a motion for partial summary judgment. Even though W a c h o v ia had not specifically requested dismissal of the breach o f contract claim in this motion, the Court dismissed the claim, n o tin g that it had been "previously dismissed . . . for failure to id en tify `any express contract provision that was breached,'" a n d that plaintiffs had "again fail[ed] to identify an express c o n tra c t provision that was breached." Anderson II, 609 F. S u p p . 2d at 366 (quoting Anderson I, 497 F. Supp. 2d at 581). P la in tif f s argue that it was improper for the Court to have g ra n te d judgment on this claim, since Wachovia had not e x p licitly sought summary judgment. W e disagree. "[D]istrict courts are widely acknowledged to possess the power to enter summary judgments sua sponte, so lo n g as the losing party was on notice that she had to come f o rw a rd with all of her evidence." Celotex Corp. v. Catrett, 477 U .S . 317, 326 (1986). The notice requirement is satisfied when a case involves "the presence of a fully developed record, the la c k of prejudice, [and] a decision based on a purely legal is s u e ." Gibson v. City of Wilmington, 355 F.3d 215, 224 (3d C ir. 2004). P lain tiff s here were on adequate notice that this claim w as subject to dismissal. The District Court entered summary ju d g m e n t on this claim as a matter of law on the ground that it w as inadequately pled, for the same reasons stated in the Court's 39

p re v io u s decision. Plaintiffs have offered no explanation as to h o w they would have benefitted from an opportunity to submit f u rth e r evidence or briefing on this claim; indeed, they appear to have essentially disregarded the District Court's earlier a d m o n i tio n explaining why the claim was inadequately pled.1 8 Although we reiterate that "the sua sponte grant of summary ju d g m e n t, without giving notice to the parties, is not the p re f erre d method by which to dispose of claims," Gibson, 355 F .3 d at 224, we find no error in the District Court's disposition o f the breach of contract claim in this case.1 9 IV . P la in tif f s argue that the District Court erred in dismissing th e ir claim that Wachovia tortiously interfered with their c o n t r a c ts with Aigner by requiring unnecessary repairs. As stated above, we exercise plenary review of a district court's g ra n t of summary judgment. P lain tiff s' tortious interference claim is grounded in

Plaintiffs do not appear to argue that the disposition of th is claim was wrong on the merits, and, in any event, we agree w ith the District Court that plaintiffs failed to plead the breach o f contract claim adequately. We do not accept Wachovia's argument that plaintiffs w a iv e d this cause of action simply by informing the Court that th e claims in the second amended complaint would not require a d d i